Senators knock federal regulators for letting JPMorgan off the hook
The egregiously light wrist-slap that federal regulators gave to JPMorgan Chase & Co. over its $125-million rip-off of California consumers has drawn the attention of Sen. Elizabeth Warren (D-Mass).
The first-term senator, who has already made a mark in Washington for her no-nonsense questioning of financial regulators, has asked the Federal Energy Regulatory Commission to justify its settlement -- a $410-million penalty that includes no criminal referrals, even though FERC identified three energy traders and a top JPMorgan executive whose fingerprints were all over the scheme.
Warren raised her questions in a letter she issued to FERC Chairman Jon Wellinghoff, co-written with Sen. Ed Markey (D-Mass.).
Warren and Markey raise several issues I’ve discussed in my columns about JPMorgan’s scam and this settlement. They point out that the $410 million is a tiny percentage of JPMorgan’s profits. They ask why no action has been taken against the JPMorgan executives who perpetrated the scheme, or who interfered with FERC’s investigation. I chronicled the latter behavior in a column last September, and explained the original scam in a column last July.
The senators also note that JPMorgan may have evaded FERC’s most stringent enforcement action -- its six-month suspension of JPMorgan’s electrical trading rights in California -- via another scam. I reported on that a week ago.
Their bottom line: “Why was JPMorgan permitted to avoid an admission of guilt in this case?” Good question, and one that points to the real issue: What will it take for regulators to really lower the boom on criminal activity by corporations? Here’s a starting point: Imposing financial penalties that have no impact on guilty executives has no deterrent effect. Kudos to Warren and Markey for pointing that out.
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Ban JPMorgan from the electricity business
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